Boiler room scammers moves to Laos from BKK

[george]

Briton held in £9m stock scam

 

A British man suspected of defrauding investors in Britain, Australia and New Zealand in a £9.5 million stock scam has been arrested in Laos, a diplomat and US officials said.

Michael Newman was arrested along with two Thai citizens at the international airport in the Laotian capital, Vientiane, on September 24 and 300,000 US dollars (£176,000) was seized from him, state media had reported. Information is restricted in the tightly-controlled communist country.

The reports said all three were charged with trying to take "money out of the country without permission". It was not clear what punishment they face.

The British and US embassies declined to comment. The Thais' identities were not immediately known.

Newman allegedly ran a so-called "boiler room" in Vientiane for several years from a building on the banks of the Mekong River, according to several sources and US documents.

They said last week that Newman, whose age and hometown were not immediately known, employed dozens of Americans and Britons to fraudulently sell stocks to overseas investors by telephone.

Boiler room workers phone potential investors and sell shares at inflated prices, or in non-existent companies, usually for high commissions.

Newman and 20 others have also been named in a civil lawsuit filed separately by the US Securities and Exchange Commission (SEC) in the state of Utah on October 16.

The suit says the defendants took part in a "massive scheme to defraud foreign investors of more than US 16 million".

At least £7 million, raised in January-September 2003, went to Newman, while some of the other defendants divided up the rest, said an SEC lawyer, Thomas Melton.

"We are still finding more money," he told The Associated Press by telephone from Salt Lake City, Utah.

On October 16, The FBI also raided offices of at least one company linked to the scheme in Salt Lake City, Mr Melton said.

It is not known how US authorities will proceed with the case. The US and Laos have no extradition treaty.

Western diplomats in Vientiane have been denied access to Newman, who is believed to be at a jail in the capital, said a foreign diplomat.

The SEC lawsuit claims Newman and the other defendants used high-pressure tactics on investors, mainly in Britain, to sell shares in five US companies: Stem Genetics, F10 Oil & Gas Properties, Diversified Financial Resources Corporation, Valesc Holdings and NCI Holdings.

The lawsuit says some were front companies with no assets, and their stock prices were manipulated to impress potential investors.

It claims Newman and his US accomplices defrauded more than 1,100 investors and transferred it to offshore accounts.

A source close to one of Newman's associates told the AP that up to 60 people worked at the recently disbanded boiler room.

"If you were good you could probably make three to four thousand dollars a week," he said. "They were paying everybody in US dollars and it's tax free."

A similar scandal rocked Thailand in 2001, when dozens of foreigners were arrested in Bangkok and deported.

--AP 2003-11-02